Millennium Drilling Co., Inc. v. Beverly House-Meyers

UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
MILLENNIUM DRILLING CO., INC.,
Plaintiff-Appellee,
v.
BEVERLY HOUSE-MEYERS; BEVERLY
HOUSE-MYERS REVOCABLE TRUST;
GRACE MAE PROPERTIES, LLC; AND,
ROBERT H. HAMRICK AND MOLLY
KAY HAMRICK,
Defendants-Appellants.
No. 16-17332
D.C. Nos.
2:12-cv-00462-MMD-CWH
2:13-cv-00078-MMD-CWH
District of Nevada,
Las Vegas
ORDER
Before: SCHROEDER, EBEL,* and GOULD, Circuit Judges.
The memorandum disposition in the above-captioned matter filed on July
30, 2018 is amended as follows:
On page 3, line 15 of the memorandum disposition, replace <Investors’ 2030
obligation> with <Investors’ future obligation>.
On page 4, line 10 of the memorandum disposition, replace <Investors
breached their obligation> with <Investors breached their future obligation>.
On page 5, line 9 of the memorandum disposition, replace <the Subscription
Note [in 2030] unless> with <the Subscription Note unless>.
* The Honorable David M. Ebel, United States Circuit Judge for the
U.S. Court of Appeals for the Tenth Circuit, sitting by designation.
FILED
OCT 5 2018
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS

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2
On page 6, line 6 of the memorandum disposition, replace <share of
Falcon’s debt until 2030.> with <share of Falcon’s debt until the Subscription
Notes matured, no earlier than 2025.>
On page 6, line 22 in note 5 of the memorandum disposition, replace <they
are not obligated to do so until 2030.> with <they are not obligated to do so until
the Subscription Notes mature.>
An amended memorandum disposition is filed concurrently with this order.
The Motion for Leave to File Reply in Support of Petition for Panel
Rehearing is GRANTED. The Petition for Rehearing is DENIED. No future
petitions for rehearing will be entertained.
IT IS SO ORDERED.

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NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
MILLENNIUM DRILLING CO., INC.,
Plaintiff- Appellee,
v.
BEVERLY HOUSE-MEYERS, BEVERLY
HOUSE-MEYERS REVOCABLE TRUST,
HAMRICK TRUST, GRACE MAE
PROPERTIES, LLC, ROBERT H.
HAMRICK, MOLLY KAY HAMRICK,
Defendants-Appellants.
No. 16-17332
D.C. Nos.
2:12-cv-00462-MMD-CWH
2:13-cv-00078-MMD-CWH
AMENDED MEMORANDUM*
Appeal from the United States District Court
for the District of Nevada
Miranda M. Du, District Judge, Presiding
Argued and Submitted June 15, 2018
San Francisco, California
Before: SCHROEDER, EBEL,** and GOULD, Circuit Judges.
A jury found that Defendant Investors 1) breached the express terms of at
* This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
** The Honorable David M. Ebel, United States Circuit Judge for the
U.S. Court of Appeals for the Tenth Circuit, sitting by designation.
FILED
OCT 5 2018
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS

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2
least one of the contracts they entered into with an oil and gas investment
partnership (Falcon Partnership), and its drilling company (Plaintiff Millennium
Drilling Co.), and also 2) breached the implied covenant of good faith and fair
dealing arising from at least one of those contracts. (The relevant agreements are
governed by Delaware law.) On appeal, Investors argue that the district court erred
in denying their post-judgment Fed. R. Civ. P. 50(b) motion for judgment as a
matter of law on these claims. Reviewing that decision de novo, see Colony Cove
Props., LLC v. City of Carson, 888 F.3d 445, 450 (9th Cir. 2018), we agree that the
district court erred. We, therefore, reverse the judgment entered on the jury’s
verdict with regard to Millennium’s claims pertaining to Falcon and remand for
entry of judgment as a matter of law in Investors’ favor on these claims.1 In light
of that decision, we need not address Investors’ other arguments raised on appeal.
In granting Investors relief, we conclude as an initial matter, and contrary to
the district court, that Investors adequately preserved their Rule 50(b) arguments
by asserting them in a mid-trial Rule 50(a) motion. See EEOC v. Go Daddy
Software, Inc., 581 F.3d 951, 961 (9th Cir. 2009).2
1 The trial also involved Millennium’s claims arising from two other oil and gas
investment partnerships, as well as Investors’ claims asserted as third-party
plaintiffs. None of these other claims are at issue here.
2 We can understand the district court’s confusion with the procedural posture of
the case, for which all parties must share some responsibility. Nevertheless, we

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3
Turning to the merits, Millennium had three theories underlying its claims
for breach of contract and breach of the implied covenant of good faith and fair
dealing, and the district court instructed jurors on each of these three theories.
Because the jury was only asked to return a general verdict, however, we cannot
tell on which theory or theories the jury found for Millennium, requiring there to
be sufficient evidence to support the jury finding for Millennium on all three
theories in order to survive Investors’ Rule 50(b) motion. See United States v.
$11,500.00 in U.S. Currency, 869 F.3d 1062, 1068-70 (9th Cir. 2017) (holding, in
considering challenges to jury instructions in civil case, that when case was
presented to jury under two theories and appellate court cannot determine on which
of those two theories the jury based its general verdict, appellate court will not
exercise its discretion to assume jury’s verdict rested on non-defective theory).
However, the record here is insufficient to support a jury finding for Millennium
on any of its three theories of breach.
1. Millennium alleged that Investors’ future obligation to repay their
Subscription Notes with interest was accelerated when Investors disavowed those
obligations in 2011 and 2012, and Investors then failed to repay those obligations
have held that even ambiguous or inartfully made Rule 50(a) motions are sufficient
to preserve arguments for Rule 50(b) purposes. See Go Daddy Software, 581 F.3d
at 961.

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4
immediately. But disavowing their future obligation to repay the notes is not an
“Event of Default” listed in the Subscription Notes that would have made that
obligation immediately due and payable.3 See Elliott Assocs., L.P. v. Bio-
Response, Inc., No. CIV.A. 10624, 1989 WL 55070, at *1, *3 n.1, *4 (Del. Ch.
May 23, 1989) (unpublished) (holding, under New York law, that even if
defendant repudiated its future obligation to pay debentures when they became due
and payable, defendant would not yet be in default under the terms of the
debentures, which did not list anticipatory repudiation as one of the events of
default; noting Delaware law does not differ).4
2. Millennium next alleged that Investors breached their future obligation to
pay a portion of Falcon’s debt owed to Millennium on those two parties’ Turnkey
Note. Falcon’s debt to Millennium under the Turnkey Note was accelerated in
2011 because of Falcon’s insolvency. Further, under their Assumption
3 Investors adequately raised this issue in their Rule 50(a) motion when they
argued “that the maturity date on these notes [is] the year . . . 2030,” “[t]he
evidence is clear that there has been no default event that would trigger
acceleration of any of these notes,” and Millennium’s expert testified that no
“event of default” listed in the Subscription Notes had occurred.
4 Millennium asserts on appeal that, because Investors never argued that the term
“default” as used in the Subscription Notes was unambiguous, it was appropriate
for the trial court implicitly to treat “default” as ambiguous and have the jury
interpret it. But no one argued this theory to the district court, at least not before
the jury’s verdict, and the jury was never instructed to determine whether the term
“default” under the Subscription Notes included repudiation of future obligations.

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5
Agreements with Millennium and Falcon, Investors “unconditionally and
irrevocably assume[d] [their] Share . . . of the principal amount of any and all
indebtedness, liabilities or obligations of the [Falcon] Partnership to Millennium
arising out of the Turnkey Note and the Turnkey Agreement.” Investors’ share of
Falcon’s debt corresponds to the amount Investors owe on their Subscription
Notes. But each Assumption Agreement’s “Time of Payment” provision states
that, “[e]xcept as otherwise expressly provided in this Agreement, [Investor] shall
not be required to pay the Indebtedness assumed in accordance with this
Agreement until the maturity of the Subscription Note unless accelerated by reason
of a default under the Subscription Note.” As previously explained, Investors did
not default under their Subscription Notes.
Citing to the initial clause in the Assumption Agreement’s “Time of
Payment” provision—“[e]xcept as otherwise expressly provided in this
Agreement”—Millennium points to the Assumption Agreement’s “Default”
provision. That provision lists several circumstances that would result in “the
Indebtedness assumed under this Agreement . . . becom[ing] immediately due and
payable.”
The first such event of default under the Assumption Agreement would be if
Investors “default[ed] in payment of the Subscription Note[s].” But, as just
explained, Investors did not default on repaying their Subscription Notes.

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A second event of default under the Assumption Agreement would be if
Investors “default[ed] . . . in any obligation assumed by him under this
Agreement.” But Investors did not default on their obligations under the
Assumption Agreement because, according to that agreement’s “Time of Payment”
provision, Investors are not obligated to pay their assumed share of Falcon’s debt
until the Subscription Notes matured, no earlier than 2025.5
Third, the Assumption Agreement’s “Default” provision provides that “the
Indebtedness assumed under this Agreement shall . . . become immediately due
and payable” if
the Participant [Investor] should become insolvent or be unable to meet
his debts as they mature, or make any assignment for the benefit of
creditors, or if a petition for relief under any bankruptcy or insolvency
law or code should be filed by or against the undersigned, or if a
custodian or similar agent is authorized or appointed to take charge of
any of the property of the [Investor] . . . .
No one argued that any of these default events occurred here.
3. Lastly, Millennium alleged that Investors’ “stated intention not to honor
their obligations under the Assumption Agreements” was a default that accelerated
those obligations. But, as just explained, disavowal or repudiation is not an “event
5 It may be, then, that Investors must repay Millennium the amount they owe on
their Subscription Notes, principal and interest, but they are not obligated to do so
until the Subscription Notes mature. That issue, however, is not before us in this
appeal.

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of default” expressly listed in the Assumption Agreements.6 See Elliott Assocs.,
1989 WL 55070, at *1, *3 n.1, *4.
In conclusion, the record does not support accelerating Investors’ obligations
under either the Subscription Notes or the Assumption Agreements. Investors,
therefore, have not breached those agreements by not yet repaying the amounts
owed on their Subscription Notes.
REVERSED AND REMANDED.
6 Investors adequately challenged the evidence to support Millennium’s second and
third theories of breach in their Rule 50(a) motion, as well.

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